The anterior-posterior axis, established during gastrulation, requires 2 major events: first, the acquisition of polarity by dorsal mesoderm and second, the induction of ectoderm by the dorsal mesoderm. We are interested in understanding the molecular basis of the formation of the anterior-posterior axis and have characterized a gene, XPO (Xenopus-posterior), which may be involved in this process. The XPO cDNA clone (4.2 KB) has been sequenced and is completely unique except for an 18 amino acid sequence that is >75% homologous to the zinc finger contained within GAG, the small nucleic acid binding protein of retroviruses. Additionally, the N-terminal portion of the deduced protein contains a heptad repeat which is not a classical "leucine zipper". The mRNA is present in early gastrulating embryos, reaches its peak during neurulation, and disappears by the ate tailbud stage. At stage 11 the transcript appears to be highly localized in osterior mesoderm and ectoderm with a small component present in the anterior ectoderm. At stage 13, the transcript was also observed in the anterior ectoderm in a region adjacent to the neural plate. A small amount of transcript was also observed in the anterior ectoderm in a region adjacent to the neural plate. In an animal ectoderm induction assay, XPO has been shown to be induced by both basic FGF and XTC factor.